Qualifying For Innocent Spouse Tax Relief

When you and your spouse report your income to the Internal Revenue Service on a joint tax return, then you trust and expect your spouse to be upfront about his or her income. However, not all spouses are honest about what they make, and they hide income from both you and the IRS. When this happens and the IRS discovers the under-reporting, then either one of you is on the hook for the penalty.

However, if you truly did not know about the income, you could be eligible for "innocent spouse tax relief." To qualify for this, you must meet certain strict requirements. Here is more information about the requirements of innocent spouse tax relief and what you can do to protect yourself.

What Qualifies for Innocent Spouse Tax Relief?

To qualify, you must clearly prove that you didn't know about your spouse's income and that you have no reason or ability to know about it. The IRS will consider factors such as your education level, financial expertise, and financial behavior. Whether you are divorced or widowed, or if your spouse abused or abandoned you are also determining factors. You have to file for this tax relief within two years after being contacted by the IRS for back taxes.

What Doesn't Qualify for Innocent Spouse Tax Relief?

If there is any indication that you knew of the missing income, then you will not qualify for this tax relief. For example, if you and your spouse lived a lifestyle that clearly went way beyond the lifestyles of other people with your income, then your claim of being an innocent spouse will not be believable. If the IRS can show that you either participated in or benefited from the error, then that would disqualify you. Suspicious activity, such as transferring property to avoid taxes, is also a red flag.

How Can One Protect Oneself From a Dishonest Spouse?

When it comes to avoiding your spouse's tax troubles, there are some other things you can do to protect yourself. One of these things is to ask your spouse questions and look at the tax return if you are not the one preparing the document. Another step you can take is to file your taxes separately to eliminate any responsibility for your spouse's taxes.

If the IRS suddenly sends you a tax bill for taxes based on your spouse's underreported income and you truly didn't know about it, then see if you qualify for the innocent spouse tax relief. However, if your situation is complicated, then you may want to consider enlisting the help of a personal tax resolution service to look at your returns and your situation to help you make things right with the IRS.

For more information on innocent spouse tax relief, contact a tax resolution service.